venturing into international construction project: malaysian perspective

ISSN 2289-8506 © 2015 GATR Enterprise. All rights reserved.

Global Journal of Business and Social Science Review journal homepage: www.gjbssr.org

GJBSSR, Vol. 1 (2), January-March 2015: 616-630

ISSN 2289-8506

Venturing Into International Construction Project: Malaysian

Perspective

Ali Alashwal1*, Kashan Pirzada2

1 Senior lecturer, Faculty of Built Environment, University of Malaysia,

50603 Kuala Lumpur, Malaysia 2 Doctoral Researcher, Faculty of Business & Accountancy, University of Malaysia,

50603 Kuala Lumpur, Malaysia

ABSTRACT

The growing need for construction of all types coupled with a tight monetary supply has provided the construction industry with a big challenge to cut cost. According to Mendelson and Greenfield (1996) the remaining part of the twentieth century would involve corporations, institutions and government in a race to survive. A tremendous demand of development worldwide has gained interest of Malaysian construction firms to venture into international construction domain. Identifying and analysing major determinants of the firm’s internal and external factors are crucial in order to ease the complexity in global market expansion. This study identifies the factors that are involved in reduction of international projects and its implications on the local economy and contractor companies. Construction projects are currently progressing slowly around the world as a result of the recent global economic crisis. In order to accommodate public needs within the current economic situation, the Malaysian Government has restricted the procurement of public sector projects to “necessary to meet public need” projects only thus narrowing the number of domestic projects available. Consequently, most major contractors have decided to change their focus by looking into international projects outside Malaysia not only to ensure the viability of their businesses but also for long-term survival. Although some Malaysian contractors have managed to penetrate successfully into international construction projects, Finally, this study is of relevance to Malaysian construction firms as it systematically highlights the internal and external factors those may affect their performance in international market.

Keywords: International Market; Malaysian Perspective; Causes; Critical Factors.

__________________________________________________________________________________

1. Introduction

Going international can be viewed as a process of foreign market entry decisions through which a firm moves from operating solely in its domestic place to international markets. Many Malaysian contractors those involved in completing Malaysia’s mega projects were found to have developed the competencies and capabilities required to expand their business internationally.

* Paper Info: Revised: December, 2014

Accepted: January, 2015

Corresponding author:

E-mail: [email protected]

Affiliation: Senior lecturer, Faculty of Built Environment, University of Malaysia

http://www.gjbssr.org/

Ali Alashwal & Kashan Pirzada

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Nowadays, Malaysia’s competitive and saturated construction market has led many domestic firms to venture into international market. With fewer projects available locally, the bigger construction firms are penetrating international construction market. Taking advantage of global opportunities allows the Malaysian construction industry to reduce the effects of domestic market conditions and have better control over its own development.

Problem Statement/Background

Over the past four decades, economics and finance researchers have shown consistent effort to investigate the causes of corporate failures. Initial studies tend to concentrate on analyzing company ratios in order to discriminate failed firms from non-failed firms. (Abd Halim @ Hamilton Ahmad, 2008). By analyzing the company’s financial ratios including computing the ratios (variables) into the Z-score prediction model, the probability of bankruptcy can be determine. Corporate failures are a common problem of developing and developed economies (Altman et al., 1979). It is commonly described as being when an associate of the firm comes up with a resolution that the firm be wound up and assign a liquidator or the associate of the firm can satisfy a meeting of its creditors to deliberate its proposal for a voluntary winding up of the firm. Corporations are not invulnerable to failure, where commonly the firm is not able to meet its liabilities (Zulkarnain & Hasbullah, 2009).] corporate failure as part of the problem.

Overview of the problem (reduction). [The current business slowdown in the construction industry in Malaysia has come down rather hard on many construction companies, particularly those that depend substantially on Government projects. The Prime Minister, Dato’ Seri Abdullah Hj Ahmad Badawi has summed this up very succinctly in his press interview with The Star, after opening the Malay Construction Entrepreneurs Convention 2005 on June 11, 2005, when he said: Contractors should face the stark reality that the construction boom in the country is over. They have to look for other opportunities, including those overseas. It is very likely we will not see another construction boom in the country. We have built enough roads, hospitals and schools to last us a very long time .I am not saying there will not be any more big infrastructure projects, but it will not be like before. The days of durian runtuh are gone. The slowdown and pessimistic business environment has dire consequences that have affected or will affect many businesses and individuals in the construction industry.] There is a need for more exposure to the international market.

Objectives of the Paper

To identify the factors dependable for reduction of number of international construction projects.

To explain the factors dependable for reduction of number of international construction projects.


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Fig.1. Conceptual Framework in Determining Malaysian Internal and External Firm’s Factors

to Venture into International Construction Market Figure 1 depicts the intention of this paper which is to identify and analyse the relative importance of critical factors of Malaysian firms in the international construction market.

2. Literature Review

Previously, Gunhan and Arditi (2005) has investigated United States contractors on their strengths, opportunities and threats in international market and it was understood that assessing those factors associated with global market are crucial to achieve sustainable business growth. Malaysian firms to viably formulate their strategic planning in international ventures. The aim of this paper is primarily to rank the relative importance of the factors influencing internationalization process based on Malaysian construction firms those had gained experience in international market. Some of the important factors are highlighted in the following paragraphs:

2.1 Effects of weather

Weather is the most uncontrollable factor amongst the other variables considered. Temperature and humidity affect productivity of workers. If the temperature and humidity are high, workers feel lethargic and lose physical coordination (Frimpong, Oluwoye and Crawford, 2003).

2.2 Inadequate production of raw materials by the country

Ogunlana, Krit and Vithool (1996) noted that the reason for shortage of materials could be the defective supply of materials occasioned by general shortages in the industry, poor communication amidst sites and head office, poor purchasing planning and materials coordination. In another development, Makoju (2000) observed that 90% of the aggregate


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components for production and delivery of electricity in the country still depends on other developed countries because of incessant supply of electricity.

2.3 Supplier manipulation

The major reasons for this factor as observed by Manavazhi and Adhikari (2002) are monopoly control of the market by some suppliers, work stoppages in factories, lack of industrialized materials, fluctuating demands forcing suppliers to wait for accumulation of orders and difficulty in importing raw materials from other countries.

2.4 Government policies

Aibinu and Jagboro (2002) revealed that Government deregulation policies aimed at liberalizing the economy since 1986 are responsible for the instability in prices. It is therefore not surprising that fluctuation claims during these periods contribute significantly to additional cost.

2.5 Contractor’s cartel

According to Omole (1986), the major projects like heavy engineering, super highways and general infrastructure can only be undertaken in few countries by a limited contractors. These contractors know themselves and therefore an indirect cartel is formed. The contractors on tendering are in a vantage position to decide amongst themselves who gets which contract and at what price. What appears on tendering to be the lowest tender may be over 20% - 30% above the actual value of the job.

2.6 Incorrect planning

Incorrect planning is one of the most important factors that affect cost of construction. Contractors must be aware of all resources that he might need for any project. The contractors, also, should utilize all resources in an efficient manner. Proper scheduling is the key to utilizing project resources, if not, the project cost will increase.

2.7 Fraudulent practices and kick back

This factor was the second most important factor affecting construction cost as noted by Elinwa and Silas (1993). Hussein (1999) also noted that fraudulent practices and kickbacks occasioned by greed are perpetrated by some major players in the construction industry. The perpetrators of this act in the industry are predominantly found within the rank and file of contractors, consultants and public clients as evident from the report published by TELL (2002). These include inflated contracts, fraudulent over payment of contractors by some of the agency officials and undue receipts of interest on funds placed in banks by the agencies.

2.8 Design Change

This problem arose form inadequate project planning and management of the design process. A quite distinctive example is the progress of West African Gas Pipeline (WAGP). Asamoah (2002) reported that WAGP project has suffered a number of setbacks, culminating in the escalation of its cost from an initial US $500 million. One of the problems includes the changing of the initial plans to lay the pipeline offshore to an onshore configuration.

2.9 Political Interference

Omole (1986) reveals that 80 percent of the contractors in Asian countries are indigenous companies. The government agencies, in most cases are teleguided by the political heavy weight to award contract to party stalwarts at very high prices.


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The consultants estimates are disregarded in most cases when awarding contracts and where possible manipulated. It is a general knowledge that governments and parastaltals particularly during the last political era give a very short time to consultants to prepare contract document for tender purposes.

2.10 Relationship between management and labour

There is always a gap between the project management and labour. This gap should be kept as small as possible, so that the relationship between management and labour may be strengthened. They should work as a team to build a project with minimum cost. If the relationship between management and labour is bad the morale of the labours will decrease and production will decrease leading to increased project cost.

2.11 Contract Management

Poor contract could be attributed to the manner in which contracts are awarded. In most cases projects are awarded to the lowest bidder (Mansfield, Ugwu and Doran, 1994). Some of these low bidders may lack management skills and have less regard for contract plans, cost control, over all site management and resource allocation. Accordingly, Frimpong et al (2003) observed that most contractors in Sub – Saharan African are entrepreneurs who are in the business of making money at the expense of good Management. Consequently, they pay low wages, submit very low bids and have very little, if any ability to plan and coordinate contracts.

2.12 Lack of coordination between designers and contractors

Contractors construct the project according to the project design. Normally, if the design has any mistakes, the contractors may apply the mistakes without knowing there are mistakes or without notifying and coordinating with the designer or the client. Implementing designs with mistakes obviously costs a lot of money.

2.13 Cost of materials

Material price is subject to supply and demand and is affected by many other things, including quality, quantity, time, place, buyer and seller. Other factors affecting material cost include: currency exchange, low or high demand, material specification, inflation pressure and availability of new materials in the country.

2.14 Additional Work

Additional work is related to design changes, which is due to lack of detailed briefing on the functional and technical requirements of the projects by the clients (Mansfield et al, 1994).

2.15 Poor Financial control on site

Controlling the project financially on site is not an easy task. All resources need to be controlled: labour productivity, material availability, material waste, good and effective methods, using effective tools, equipment, good project planning and scheduling. Project management should therefore be aware of all those factors in order to achieve better financial control on site.

2.16 Disputes on site

Dispute is a major obstacle for any project. Normally disputes will exist if work does not match the contract document or if work is not included in the contract document. Any dispute will eventually delay the project and increase project cost.

2.17 Fluctuation of prices of materials


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Omoregie and Radfort (2005) surveyed contractors, consultants and public clients and revealed price fluctuation as the most severe cause of project cost escalation in construction projects. This could be attributed to the limitation in exchange rate which in turn affects construction materials prices and the general price level. Another factor is the unstable inflationary trend in the countries which is a result of demand exceeding supply, creating a scarcity of goods which in turn leads to escalation of the goods.

2.18 Contract procedure

The contract document is the ground rule between all parties (contractors, consultants and clients).One part of the contract document is the contract procedure. The contract procedure shows the type of contract, payment procedure constraints and regulations within the contract. The type of contract affects the projects because of the risk involved in some types of contract (i.e. lump sum).Unclear contract procedures will lead to disputes, project delay and cost overrun (Fisk ,1997)

2.19 Wrong method of estimation

This factor could be attributed to the unpredicted inflationary trend, lack of adequate training and experience at the senior management level, and fraudulent practices Mansfield et al (1994).

2.20 Waste on site

It seems that the little waste of construction material on site should have a very minor effect on the total material cost. However, this minor effect can reach up to 50 % of the total material margin of a project. So waste on site has to be considered on tendering any project (Elinwa and Silas, 1993)

2.21 Transportation cost

As the government increases the price of fuel, transportation companies raise the cost of their services to cover the fuel increase and that obviously translates to an increase in transportation cost.

2.22 Duration of contract period

Usually the longer the duration of the contract the more resources will be put into the project. Any delay to a project will lead to an increase in the project cost. If the delay comes from the contractors, the project owner will lose the opportunity to invest in the project earlier. Also, if the cause of the delay is the client, the contractor may lose the opportunity to win other projects or suffer from the non – utilizing the full resources.

2.23 Equipment cost

Ogunlana et al (1996) reported that financing and payment of completed works is responsible for cost escalation in the countries. Generally, contractors are sometimes not paid in accordance with the contract conditions. There are cases where clients fail to honour Architect’s certificate of payment for up to 6 months or more whereas the contact conditions, in most cases stipulates about 28 days .

Most contractors when preparing their tenders make allowance for partial financing of the project. They charge the clients for payments of interests and bank charges on moneys they anticipate to borrow from the banks to finance these projects (Omole, 1986). The irregular financing of public projects is a major cause of liquidity problem for contractors: however, contractors can be paid in accordance with the contract agreement if clients can generate the availability of adequate funds before the project commences (Mansfield et al, 1994).


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2.24 Contractors’ Financial Difficulties

According to Zagorsky (2007), financial difficulty is defined as getting into a situation where a respondent's credit is adversely impacted, such as not paying bills. Contractor‟s financial difficulties are defined as the contractor not having sufficient funds to carry out the construction works. This includes payment for the materials, labourer’s salaries and equipment to be used for the construction work. Thornton (2007), in his survey, found that slow collection, low profit margins and insufficient capital or excessive debt are the 3 major causes of financial difficulties among contractors.

2.25 Labour Shortage

Bruce and Dulipovici (2001) defined labour shortages in simple terms as the difficulty in finding the right people to fill the available job. Labour shortage is a problem faced by many countries all over the world. This is shown by the reports by Wang (2010), Anonymous (2010) and Hanim (2010). These three newspaper reports indicated the labour shortages in three different places in the world namely Beijing, Dong Nai and Malaysia respectively.

2.26 Poor Site Management

Effective and efficient site management by contractors is very important to ensure projects are completed on time. Poor coordination contributes to delay from estimated completion time. Poor site management may occur when contractors do not have enough experience and suffer from a lack of knowledge in managing the project team (Kadir et al., 2005). A project manager is the leader in a construction project in the sense that he is required to manage all the works on site from monitoring progress of construction works to managing all the administrative work in the project. It is of utmost importance for the project manager to manage the work and project teams effectively. Hence, poor site management from the project manager will affect the whole team and also the progress of works, resulting in the eventual outcome of project delay. This view is supported by studies conducted by Augustine and Mangvwat (2001), Arshi and Sameh (2006), Arditi et al. (1985), Faridi and El- Sayegh (2006), Toor and Ogunlana (2008), Yang and Ou (2008), Sweis et al. (2008), Aibinu and Odenyika (2006) and Ahmed et al. (2003) who concluded that poor site management is one of the factors that contribute to delay in construction projects.

2.27 Equipment and Tool Shortage

Chang et al. (1991) highlighted that the input of tools and equipment used in the construction site are either provided through direct investment by the contractor or acquired through leasing. Some contractors may acquire tools and equipment using both methods. The contractor has to plan the usage of equipment according to the construction work to be carried out during a particular period of time because equipment obtained by leasing has to be returned to the supplier by the due date at the end of the lease period. Joyce (2006) added that the construction of high rise buildings is increasing and, as a result, the use of cranes is also increasing. However, this is contributing to equipment shortage as the crane suppliers do not have a sufficient number of cranes to be leased out in order to meet this increasing demand. Hence, it is less likely that the contractor would be able to extend the lease period of cranes if it was necessary to do so. This shows that failures in effectively planning the usage of equipment will cause equipment and tool shortages.

2.28 Construction Mistakes and Defective Works

Gerskup (2010) claimed that poor workmanship, carelessness and shortcuts are the three key factors that will contribute to defective works. Zanis (2010) also agrees that poor workmanship is the main contributor to defective works. She reported that the quality of schools constructed in Zambia are poor due to poor workmanship by the contractor. In addition, Kedikilwe (2009),


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in another case, mentioned that poor workmanship is the main factor that produces dysfunctional solar panels in buildings.

The use of poor quality materials is one example of poor workmanship. In Turkey, several of the building collapses in the Bingol–Karliova earthquakes were due to the use of improper aggregate in the concrete during construction (Binici, 2007). In the same study, Binici, (2007) found that the reinforcement bars used had corroded, leading to the strength of the concrete being greatly reduced. Poor workmanship which leads to defective works has to be rectified by the contractor but in order to do that, the project will require postponement of time.

2.29 Coordination Problems

In a construction project, there are many parties involved such as contractor, consultant, sub-contractor and client. Often, it may be difficult for these various separate parties to coordinate well in order to complete the project. In one study conducted by Assaf et al. (1995) it was found that difficulty in coordination between the parties is one of the factors that contributes to delay. In addition, Majid and McCaffer (1998) also agreed that coordination problems will contribute to delay.

Ali et al. (2008) and Kadir et al. (2005) stated that lack of coordination between contractors and subcontractors will lead to delay, for example in the situation that newly revised construction drawings of a project may be issued later by the contractors to the subcontractors. This leads to construction mistakes and the work requiring to be redone. Reconstruction work takes additional time, therefore impacting upon the completion time of the project.

2.30 Cost Overrun

Cost overrun is a situation where the amount of money used is greater than the initial project cost or estimated cost (Singh, 2009). Aibinu and Jagboro (2002) found that cost overrun is the most frequent effect of delay in Nigeria and other countries. This is further supported by Sambasivan and Yau (2007) who found that cost overrun was ranked second in their study of delay effects in the Malaysian construction industry. This is due to overtime costs in order to continue the construction work and any compensation required as a result of the delay (Hanna et al., 2004). Besides that, additional money is required for rework if any construction mistakes have occured. According to Sun and Meng (2009), the cost of rework can be as high as 10-15% of the estimated project cost. This shows that cost overrun is one of the most frequent effects of delay in the construction industry.

2.31 Extension of Time (EOT)

Extension of time is an event where extra time is requested in order to complete the project (USLegal, 2010). According to Odeh and Battaineh (2002), client-related delay is the major factor contributing to delays. Thus, contractors can claim suitable EOT if the cause of delay is beyond the control of the contractor and is brought about by client-related factors (Othman et al., 2006). This is mentioned by Williams (2003) in his study on assessing Extension of Time delays on major projects. Usually contractors can claim EOT due to client or owner related delays in construction projects.

2.32 Late Payment

According to Nichol (2008), late payment is a common problem especially during times of economic crisis. This is supported by Still (2000) who found that late payment is a major problem in Western countries. In the study by Odeh and Battaineh (2002), late payment was the second highest factor contributing to delay, ranked by consultants. Late payment may occur during the construction process and it is likely to be more severe during delay periods. The owner or client may use postponement of the project as a reason to delay the payment to the contractor.


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2.33 Rescheduling

According to Vieira et al. (2003), rescheduling is the change of original schedule of time in order to respond to disruption and problems which have occurred. In the construction industry, schedules may be updated in order to monitor the time and work in construction projects (Liu and Shih, 2009). The importance of schedule updates are as mentioned by Liu and Shih (2009): (1) compare the original schedule with the actual progress of the project; (2) identify all delayed activities; (3) identify who or what is responsible for delays; and (4) forecast and modify projected work progress based on actual progress. Based on the schedule update, delayed activities can be identified and usually, rescheduling is required due to the delayed work. Thus, rescheduling is one of the effects of delay in construction projects.

2.34 Affect Company Reputation

According to Djordjevic and Djukic (2008), company reputation is one of the most important intangible assets. Ismail et al. (2006) support this statement and add that reputation is built from the overall performance of the company. The reputation of a company is very important because an adversely affected reputation can become a business threat (Murray, 2003). Strategic planning, corporate governance and corporate codes of conduct are the top three factors that affect company reputation according to the study conducted by Ismail et al. (2006). Thus, delay in construction projects will affect the company reputation indirectly.

2.35 Lost Productivity and Efficiency

According to McDonald and Zack (2004), productivity is the measurement of labour efficiency to complete the required work. Lost productivity and efficiency of the labourers always occurrs when delays happen (Bramble and Callahan, 2000). This occurs due to acceleration of the schedule and also the pressure to complete the work. In addition, delays caused by construction mistakes will need rework and this leads to a significant increase in the amount of work the labourers are required to complete. This directly reduces the productivity and efficiency of the working labourers.

2.36 Market conditions

Changes in the macro environment can affect the costs of a project, particularly large projects. Often only large contractors or groups of contractors can work or even obtain bonding for a large project. The size of the project affects competition for a project and the number of bids that an agency/owner receives for the work. Typically, the risks associated with large projects are much greater, both for the owner and contractor, and that affects project costs. Inaccurate assessment of the market conditions can lead to incorrect project cost estimating. Market conditions affect the project costs during the execution phase similar to the effects during the planning phase. Changing market conditions during the construction of a project that reduces the number of bidders, affects the labor force, and other related elements can disrupt the project schedule and budget

2.37 Effects of inflation

Inflation is one of the key factor in the underestimation of costs for many projects. The time value of money can adversely affect projects when _1_ project estimates are not communicated in year-of-construction costs, _2_ project completion is delayed and therefore the cost is subject to inflation over a longer duration than anticipated, and/or _3_ the rate of inflation is greater than anticipated in the estimate. Industry has varying views regarding how inflation should be accounted for in project estimates and in budgets. In the case of projects with short development and construction schedules, the effect of inflation is usually minor; however projects having long development and construction durations can encounter unanticipated inflationary effects.

2.38 Unforeseen conditions


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Unforeseen conditions are notorious for causing cost overruns. Unknown soil conditions can effect excavation, compaction, and structure foundations. Contaminated soils may be present. Utilities are often present that are not described or described incorrectly on the drawings. There are a multitude of problems that are simply unknown during the planning and design phases and which can increase project cost when they become apparent during construction _Akinci and Fischer 1998; Arditi et al. 1985; Callahan 1998; Harbuck 2004; Hufschmidt and Gerin 1970; Merrow 1988; Semple et al. 1994; Touran et al. 1994.

2.39 Scope changes

Scope changes which should be controllable by the agent/ owner management, can result in underestimation of project costs. Such changes may include modifications in project construction limits, alterations in design and/or dimensions of key project items such as adjustments in type, size, or location of project components, as well as other increases in project elements.

2.40 Scope creep

Scope creep is the tendency for the accumulation of many minor scope changes to increase project costs. While individual scope changes may have only minimal cost impacts, the accumulation of these minor changes, which are often not essential to the intended function of the facility, can result in a significant cost increase over time. Many of these minor changes are real needs that are recognized as more is known about the project but others are often only nonessential additions. Projects often seem to grow naturally as the project progresses from inception through design development to construction. These changes can often be attributed to the different needs of the traveling public or environmental compliance in the area being served Akinci and Fischer 1998; Board on Infrastructure and the Constructed Environment 2003; Booz Allen & Hamilton Inc.

2.41 Local concerns and requirements

Local concerns and requirements typically include mitigation of project impacts on the surrounding community as well as negotiated scope changes or additions. Actions by the agency/owner are often required to alleviate perceived negative impacts of construction on the local societal environment as well as the natural environment. Measures may include but are not limited to intro ducing changes to project design, alignment, and the conduct of construction operations. These steps are often taken to appease the local residents, business owners, and environmental groups. The required accommodation is often unknown during the early stages o project development. There are a multitude of examples of “drastic” measures that are taken to accommodate local government and citizen concerns as well as national concerns with two of the most notable examples being actions during the Legacy Highway project in Utah and the Big Dig in Massachusetts. In Utah environment concerns raised by the community played a major role in delaying the project and increasing the cost. In Massachusetts the community demanded a signature bridge across the Charles River. The resulting cable-stayed bridge with Y-shaped towers added significantly to the project’s cost.

3. Conclusion & Discussion

International construction market provides huge potentials that attracted Malaysian contractors to expand their businesses. However, differences in the domestic market compared to the international market present the necessity for the contractors to re-examine their strengths, weaknesses, opportunities, and threats when entering global construction market. It is pointed out that as the firms internationalize, factors affecting the expansion must be taken into consideration before they can strategize and implement the action plans.

4. Future Studies


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In essence, this study offers a valuable reference of practices that interested Malaysian construction firms can adapt as strategies and preparation before moving internationally. Moreover, the factors highlighted in this study would be test empirically that give more insight of the drastic reduction of construction projects. The local construction firms that aim to position themselves in the global market as it considers a specific important spectrum of successful international Malaysian firm’s decision making based on their business ventures. Moreover, another way of future research would be to conduct the focus groups and structural interviews with the manager and professional of Malaysian construction firms.

Acknowledgement

The authors are grateful to the University of Malaya for providing us the funds to conduct this research.

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Appendix

Variable Type

Variables Details Measures Utilized

DV Reduction of International Construction Projects

Index of (89 variables ) Principle Component Analysis

IV Economic (internal / external) uncontrolled factors

1 Economic stability Elinwa and Silas (1993)

2 High interest rates charged by banks AL– Khaldi (1990) , Beliz Ozorhon, Wang et al

3 Inflation impact Elinwa and Silas (1993) , Beliz Ozorhon

4 Currency fluctuation AL– Khaldi (1990) , Beliz Ozorhon

5 Fluctuation of prices of materials Omoregie and Radfort (2005)

6 Component price fluctuation Omoreigie and Radford (2005)

7 Volatile oil prices AL– Khaldi (1990)

8 Chances of bankruptcy Bobrova and Kalvina, 2004; Fry, 1998

9 Market Conditions Callahan 1998; Chang 2002; Mackie and Preston 1998; GAO 1999; Merrow 1988; Pearl 1994; Sawyer 1952;

IV Financial (internal)

10 Contractors’ Financial Difficulties Zagorsky (2007), Thornton (2007)

11 Cost overrun (Singh, 2009), Aibinu and Jagboro (2002), (Hanna et al., 2004)

12 Mode of financing bonds and equity financing

Ogunlana et al (1996), (Mansfield et al, 1994).

13 Poor financial control in the project Ogunlana, Krit and Vithool (1996)

14 Poor risk analysis Beliz Ozorhon, Wang et al

15 Default risk Beliz Ozorhon, Wang et al


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16 Absence of construction cost data Elinwa and Silas (1993) , AL– Khaldi (1990)

17 High cost of labour Elinwa and Silas (1993)

18 High cost of professionals

19 High cost of machinery Elinwa and Silas (1993) , AL– Khaldi (1990)

20 High cost of transportation Elinwa and Silas (1993)

21 Insurance cost AL– Khaldi (1990)

22 Late payment Nichol (2008), Still (2000), Odeh and Battaineh (2002)

23 Wrong method of estimation Mansfield ,Ugwu and Doran (1994) , (Hopkinson, 2007)

24 Cost of Material AL– Khaldi (1990)

25 Inconsistent application of contingencies

Mackie and Preston 1998; GAO 1999; Merrow 1988; Parsons, Brinckerhoff Quade & Douglas, Inc. 2002; Pearl 1994; Sawyer 1952; Schroeder 2000;

IV Construction-related

26 Materials holding cost

27 Lost Productivity and Efficiency McDonald and Zack (2004), (Bramble and Callahan, 2000).

28 Rescheduling Vieira et al. (2003), (Liu and Shih, 2009)

29 Shortage of labour in the host country (Inadequate labour availability)

Bruce and Dulipovici (2001), Wang (2010), Hanim (2010) Elinwa and Silas (1993) , AL– Khaldi (1990)

30 Inadequate production of raw materials by the country

Ogunlana, Krit and Vithool (1996), Makoju (2000)

31 Equipment and tool shortage Chang et al. (1991), Joyce (2006), Wendle (2008)

32 Construction mistake and defective work

Gerskup (2010), Zanis (2010), Kedikilwe (2009)

33 D Delay/ Duration of contract period Sambasivan and Yau (2007), Sun and Meng (2009)

34 Disputes on site Aibinu and Jagboro (2002)

35 Waste on site (Elinwa and Silas, 1993)

36 Poor site management (Kadir et al., 2005), Augustine and Mangvwat (2001)

37 Frequent design changes Asamoah (2002)

38 Number of construction going on at the same time

Elinwa and Silas (1993)

39 Additional Work (Mansfield et al, 1994)

40 Incorrect Planning Elinwa and Silas (1993) , Sambasivan, 2007

41 Supplier manipulation (Elinwa and Silas 1993) , (Haynes, 2002)

42 Scope changes Booz Allen & Hamilton Inc. and DRI/McGraw-Hill 1995; Callahan 1998; Chang 2002;

43 Scope creep Akinci and Fischer 1998, Chang 2002

44 Faulty execution Callahan 1998; Chang 2002; Touran et al. 1994.

45

46 Delivery/procurement approach Harbuck 2004; New Jersey Department of Transportation 1999; Parsons Brinckerhoff Quade & Douglas, Inc. 2002; Science Applications International Corporation 2002; Weiss 2000


629


47 Number of Extension of Time (EOT)

Odeh and Battaineh (2002), (Othman et al., 2006)

IV Knowledge-Related

48 Lack of experience in the complex projects

AL– Khaldi (1990)

49 Previous experience of contractor AL– Khaldi (1990)

50 Engineering and construction complexities

Hufschmidt and Gerin 1970; GAO 1997,1999, 2002; Touran et al. 1994

51 Lack of experienced engineers (Keegan, 2004; Haynes, 2002)

52 Poor technology Kumar, 2012 , Bobrova and Kalvina, 2004

53 Lack of research capacity and business innovation

Economics, 2010; Kintu, 2008)

54

IV Organizational

55 Affect Company Reputation Djordjevic and Djukic (2008), Ismail et al. (2006), (Murray, 2003)

56

57 Coordination problems Assaf et al. (1995), Ali et al. (2008) and Kadir et al. (2005), AL– Khaldi (1990)

58

59

60 Contractual procedure Elinwa and Silas (1993) , AL– Khaldi (1990)

61

62

63

64 Lack of productivity (quality) standard

Eyo – Ita – Eyo (2001), AL– Khaldi (1990)

65

66 Organization restructuring (Kerzner, 2003)

67

68 Contract Management (Mansfield, Ugwu and Doran, 1994), Frimpong et al (2003)

69 Relationship between management and labour

AL– Khaldi (1990)

70 Management style (Keegan, 2004; Haynes, 2002)

71 Fraudulent practices and kick backs Elinwa and Silas (1993). Hussein (1999)

IV Cultural

72 Social and cultural impacts AL– Khaldi (1990) , Manavazhi and Adhikari (2002) , Bobrova and Kalvina (2004)

73 Culture of supplier impacts Elinwa and Silas 1993)

74 Foreign competitors in the host country

AL– Khaldi (1990)

75 Labour nationality AL– Khaldi (1990)

IV Environmental

76 Effect of weather (Frimpong, Oluwoye and Crawford, 2003)


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77 Unforeseen events (act of God) 1998; Chang 2002; Hufschmidt and Gerin 1970; Merrow 1988; Semple et al. 1994; Touran et al. 1994.

IV Networking

78 Lack of networks Elinwa and Silas (1993)

79 Lack of coordination between designers and contractors

(Sturup, 2009; Frick, 2006; Flyvbjerg, et al., 2003)

80 Lack of Supply chain management Latham Report & Egan Report

81 Quality of the relations between IJV partners and the host government

Gjerde, 1995

IV Political

82 Contractor’s cartel Omole (1986),

83 Lack of policies Omole (1986)

84 Political connections/ interferences Elinwa and Silas (1993) , Omole (1986)

85 Intense rivalry in construction industry

Aibinu and Jagboro (2002)

86 Government Policies Root (1994), Aibinu and Jagboro (2002)

87 Bureaucracy and corruption practices

Elinwa and Silas (1993)

88 Bias Akinci and Fischer 1998; Bruzelius et al. 1998; Condon and Harman 2004; Flyvbjerg et al. 2002; Hufschmidt and Gerin 1970; Pickrell 1992

89 Local concerns and requirements Callahan 1998; Chang 2002; Daniels 1998; Harbuck 2004; Hudachko 2004

venturing into international construction project: malaysian perspective

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